As businesses marketing budgets continue to narrow and be under stricter scrutiny, it’s more important now than ever to evaluate your marketing channel mix and determine what works what doesn’t.
Starting with the basics, there are two primary types of marketing channels. One is inbound marketing, which is mostly what we are familiar with as newer marketing including search engine optimization, blogs and social media. Then there is outbound marketing, what I refer to as older marketing routes including such things as telemarketing, direct mail and tradeshows.
Looking back 10-20 years, outbound marketing is all we knew. Back in the day, during my college marketing classes most of our time was concentrated on studying and analyzing outbound marketing tactics and strategies. During the 4 years we only briefly touched on inbound marketing with website design being the biggest. Our marketing professor was completely blown away at the fact that as part of my marketing plan I proposed a website redesign, with a blog feature and even took time to design the proposed layout.
Fast-forward over 10 years--at this point I can safely say that well more than 50% of current school teaching is spent on inbound marketing. This year alone, I have received numerous contacts from college students researching inbound marketing pricing and asking questions about the latest inbound marketing tactics. I’m glad to know things are still going in the right direction.
So, what are the industry trends and what works? Based on the latest marketing numbers from the Hub Spot – 2012 Inbound Marketing Survey, small businesses rely on inbound marketing much more than outbound marketing, with a 43% vs 14% expenditure difference. While larger businesses, in my opinion being less agile, still spend 21% on inbound and 33% on outbound marketing.
Based on the research, inbound marketing conversion rates are much higher and also lead to higher referral rates. Search engine optimization, social media and blogs perform the best out of all other marketing efforts. SEO alone leads the industry by having 14.6% close rate, compared to all other outbound source leads only having a 1.7% close rate. It’s hard to see why anyone would choose to invest heavily in such a low converting option.
Having said all this, I haven’t even addressed the cost comparison of the two channels. In 2012 outbound marketing average cost per lead was 61% higher than inbound marketing, with the average outbound cost being $346 per lead in comparison to average inbound cost of $135 per lead.
Now, the question to ask yourself is, why spend 61% more of your marketing dollars on a lead that has more than 10 times lower business conversion rate, and results in less reoccurring business from referrals? As an owner of a small business, it’s harder than ever to compete with large corporate companies with deep marketing pockets and a slew of sales flunkies who are willing to throw in the moon and the stars together with bunch of empty promises just to get your business.
On the bright side, however, those companies’ size and closed-minded thinking is causing them to lose a competitive edge by concentrating on higher priced, less cost effective old school marketing channels and tactics instead of adapting to newer, more agile marketing technologies.